This International Women’s Day, Bloomberg HT spoke to Emmanuelle Ganne, Chief of Digital Trade and Frontier Technologies at the World Trade Organization, about some of the challenges women face when accessing international trade markets.

1. Women-led businesses struggle to export – Only 15-20% of exporting companies are led by women, with barriers like operating in non-export-heavy sectors and being smaller in size.
2. Access to finance is a major hurdle – Many women face challenges securing funding due to shorter credit histories and assets often being registered in a man’s name.
3.  Policy matters – Governments can drive change by integrating a ‘gender lens’ into trade regulations, ensuring policies support women-led businesses.
4. Data drives action – Better gender-disaggregated data can help policymakers and organisations develop targeted solutions.
5. Digitalisation can be a game changer – Technology provides women with better access to international markets, trade information, and alternative financing solutions.
6. AI could unlock new opportunities – AI-powered alternative data can help assess creditworthiness, making it easier for women to secure funding.
7. Connectivity remains a challenge – For women in developing economies, limited Internet access still restricts their ability to leverage digital trade tools.

This interview was recorded at our inaugural event: Women in Trade, Treasury & Payments.

The post VOXPOP | Emmanuelle Ganne on the challenges women face when accessing international trade markets appeared first on Trade Finance Global.

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Estimated reading time: 5 minutes

AI holds the power to transform trade, offering opportunities to enhance efficiency, reduce costs, and empower smaller players in the global market. However, it also introduces complexities and ethical dilemmas. The question remains to be seen: will it bridge gaps, lower barriers, and drive innovation? Or will it create hurdles, deepen inequalities, and exacerbate existing challenges?

The promise of AI reshaping trade and services

When most people imagine AI in a business setting, they picture large tech giants or multinational firms leveraging cutting-edge AI tools to optimise processes and outpace competitors. While larger firms tend to be at the vanguard of the technology’s development, the potential benefits reach smaller businesses as well.

Ganne said, “AI can transform raw data into actionable insights, whether it’s optimising logistics, automating customs and compliance processes, or predicting supply chain disruptions.”

At the state level, countries with limited resources can expand their role in international trade by reducing inefficiencies and cutting costs. This creates opportunities for smaller economies to compete in markets traditionally dominated by larger, wealthier nations.

Ganne said, “AI can reshape countries’ comparative advantages. New competitive advantages could emerge from factors like educated labour, digital connectivity, favourable regulations, or even abundant energy.” Such factors can help them emerge as leaders in this transformative space. The potential for growth and innovation is immense as nations work toward a more connected and equitable global marketplace.

Facing the challenges that come with AI

The technology’s inherent complexity introduces risks, particularly the opacity of its decision-making processes. This “black box” phenomenon of traditional models makes understanding or predicting how AI arrives at its conclusions difficult. Such uncertainty can undermine trust and lead to unintended consequences.

Ganne said, “There is a big challenge to regulate AI and ensure that it is trustworthy, meaning that it meets expectations in terms of reliability, security, privacy, safety, and accountability.”

Ethical concerns also loom large. AI systems are prone to biases that reflect the limitations or prejudices of their training data. These biases can perpetuate stereotypes and create disparities, especially in regions already struggling with inequality. 

This is where regulatory challenges come to the fore, as existing frameworks were designed for human decision-making, not the evolving behaviours of machines. The question of intellectual property further complicates the picture. When AI generates content, who owns it? 

Ganne said, “AI systems rely on vast amounts of data to learn and improve. If that data includes copyrighted material, like books, images, and software code, was permission obtained to use it?”

Balancing innovation with oversight requires a delicate approach. Policymakers must craft regulations that encourage AI’s development while protecting against its potential misuse. Without such balance, the challenges could overshadow the opportunities.

The growing gap between those with AI and those without

While AI opens doors for some, it risks shutting them for others. 

Advanced economies, with their robust digital ecosystems, skilled workforces, and substantial investments in research and development, are able to fully exploit the potential of AI. These countries are not only developing AI but also controlling the data and technology needed to fuel it, consolidating their advantages in trade and economic growth.

Meanwhile, lower-income countries face significant barriers. Without reliable high-speed internet, advanced computing power, or adequately trained professionals, these nations struggle to integrate AI into their economies. This lack of access prevents them from benefiting from the efficiencies and opportunities AI creates, leaving them further behind in the global market.

Ganne said, “The concentration of the AI value chain, with players like NVIDIA, TSMC, or ASML controlling 80% of the market, raises significant concerns about equity and access.”

Moreover, the concentration of AI expertise and resources in a few countries exacerbates this inequality. 

Ganne added, “Only a few players control the rich datasets that actually fuel AI. Without cooperation to address these issues at a global level, the gap between AI haves and have-nots is likely to grow wider.”

This is why targeted and collaborative global efforts to democratise AI are needed.

Why the world needs to work together on AI

The world needs to work together on AI to prevent disparities and inequalities from becoming more pronounced because AI’s potential benefits are immense, but they risk being unequally distributed. 

By collaborating, nations can share knowledge, expertise, and best practices to ensure AI technologies are accessible to all. Unified global standards and regulatory frameworks would help smaller and developing countries adopt AI in ways that align with ethical guidelines, data privacy, and safety measures. 

Trade rules, while technology-neutral, already cover aspects of AI, such as eliminating tariffs on critical components or supporting cross-border services. However, the fragmented approaches taken by individual countries create inefficiencies and inconsistencies.

Ganne said, “What we urgently need is cooperation to promote regulatory convergence.”

By fostering dialogue, sharing best practices, and creating unified standards, nations can avoid the pitfalls of regulatory fragmentation. Equitable access to AI technologies depends on proactive policymaking that prioritises inclusivity and shared progress.

Ganne said, “The WTO, as a global forum for cooperation, dialogue, and exchange of good practices, can play an important role in fostering global convergence.”

By working together, countries can ensure AI serves as a tool for uniting rather than dividing the global trading system.

–

AI has the potential to redefine international trade, unlocking new opportunities and transforming the way economies interact. Yet, this transformation is not without its challenges. The hurdles, from ethical dilemmas to growing inequalities, are significant but not insurmountable.

The future of AI in trade depends on how nations and organisations approach these challenges today. Cooperation, inclusivity, and thoughtful regulation will be key to ensuring AI’s promise outweighs its risks. 

Whether AI helps or hinders international trade will ultimately be determined by the choices made now. The opportunity to shape a more connected and equitable global market is within reach, but it demands collective effort and vision.

The post PODCAST | Will AI help or hinder international trade? appeared first on Trade Finance Global.

The supply chain and transport disruptions caused by the COVID-19 pandemic had become so severe that the business of this small company – a stockist of bar and restaurant furniture that imports from Asia – was now under threat.

Even at the best of times, it can be complex for small businesses to participate in international trade – whether due to lack of information, complex procedures that involve numerous actors, lack of access to trade finance, or processes that remain heavily paper-based.

The current pandemic has brought these challenges to a new level, threatening the lives of millions of SMEs.

The International Trade Center (ITC) estimates that 60% of micro and 57% of small businesses have been strongly affected by the pandemic, compared with 43% of large firms.

During the early days of the pandemic, governments rapidly stepped in to help small businesses stay afloat.

Our mapping of actions taken by governments shows that most support measures focused on providing short-term liquidity, to ensure that businesses could ride out the pandemic and to try to prevent unnecessary layoffs. 

Some WTO members also introduced measures to support SMEs engaged or interested in international trade, in the form of deferrals of and reductions in trade-related payments, such as customs duties or freight fees, as well as export credits.

But these measures are only patches. To help small businesses build resilience in the long term, strong action is needed to lower the cost of entry into the marketplace for small businesses and level the playing field. 

Digitalisation can play an instrumental role in this regard.

The promise of digital

E-commerce has been a lifeline for many SMEs during the pandemic. 

Various studies have shown that SMEs selling online, even in sectors hit hard by the pandemic, did significantly better than those not selling online.

As an increasing number of SMEs had no choice but to turn to new suppliers and markets to mitigate the impact of the pandemic, the need for easy access to vetted and reliable information became more important than ever. 

Lack of information on foreign markets has been a recurring complaint of small businesses since well before the pandemic. 

The call for easier access to market grew louder in the early days of the pandemic, leading the international community to accelerate efforts to develop platforms such as the Global Trade Helpdesk (GTH).

This multi-agency initiative jointly led by the ITC, UNCTAD, and the WTO aims to simplify market research for companies, especially SMEs, by integrating trade and business information (such as tariffs, rules of origin, and non-tariff measures) into a single online portal. 

The numerous testimonies received since the beginning of the pandemic about the difficulty finding trade-related information among SMEs also prompted the WTO Informal Working Group on MSMEs to develop the Trade4MSMEs platform.

Launched in December 2021, the platform aims to help small companies find trade-related information that improves their ability to trade internationally. 

The platform contains short guides providing key information on the steps that companies need to follow before exporting or importing goods or services, such as how to assess the export potential of the markets they are targeting, and their readiness to export.

A new frontier with advanced digital technologies

More importantly, perhaps, to level the playing field for SMEs is the impact that digital technologies could have on trade processes.

Technologies such as blockchain open interesting opportunities to truly digitise trade documents, by fixing the famous double-spending problem and breaking down the silos between multiple actors involved in a trade transaction.

This would reduce coordination and transaction costs that weigh heavily on small firms.

Digital technologies from artificial intelligence (AI) to blockchain and Internet of Things (IoT) are being used to try and address the infamous trade finance gap. 

Far from shrinking, the global trade finance gap hit an all-time high of $1.7 trillion in 2020, according to the Asian Development Bank (ADB), with SMEs the hardest hit. 

From deep-tier financing to better risk assessment, opportunities to fix the financial plumbing of global trade through digital technologies are numerous.

Urgent action is needed to accompany the move to digital

Unfortunately, digitalisation without the right legal framework or standards can only have a limited impact.

A legal framework that allows for the recognition of e-signatures and e-documents is essential, as are standards that allow data to flow seamlessly from one end of the supply chain to the other. 

To date, only seven jurisdictions have transposed the Model Law on Electronic Transferable Records (MLETR), and use of standards for trade documents remains limited. 

Urgent action by both public and private actors is needed on these two fronts to make trade digitalisation a reality.

With the current pandemic accelerating the move to digitalisation, we now have a unique chance to digitalise trade. 

Let’s not waste it. Let’s create the right ecosystem to allow digital technologies to facilitate international trade and enable small players – like the UK stockist of bar and restaurant furniture – to thrive.

Read our latest issue of Trade Finance Talks, Spring 2022

Read here

The post Helping SMEs build resilience through trade digitalisation appeared first on Trade Finance Global.

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Trade finance has been undergoing a digital revolution for decades but the advancement of new technologies such as blockchain and distributed ledger technologies (DLT) has accelerated this.

A 2020 study by Trade Finance Global (TFG) and the World Trade Organization (WTO) shows 12 initiatives using DLT in trade finance (both open account and documentary trade).

So, here goes…!

Note: the information in this post is correct as of 1 October 2020. Read our latest tradetech research here.

1|Contour

Contour, recently rebranded from Voltron, is delivering a Corda-powered open industry platform to create, exchange, approve, and issue letters of credit.

Following a production launch at the end of Q3 2020, each participant will be able to host their own node on the business network.

The application will be a complete end-to-end workflow for letters of credit including co-drafting applications, issuance, amendments, presentation, connectivity to digital document providers, discrepancy resolution, and settlement.

It will also be protected with bank-compliant security measures. 

The revenue model for Contour’s permissioned platform has not been officially announced but is anticipated to be based on monthly subscription fees and transaction fees based on volume, not value.

The founding banks and principal participants include Bangkok Bank, BNP Paribas, CTBC, Citi, ING, HSBC, SEB, and Standard Chartered.

In the future, Contour plans to roll out a guarantees solution, which will be expanded to cover both standby letters of credit and guarantees in its production launch.

They are also looking to create a solution for documentary collections utilising digital documents rather than paper.

2|EC3 Platform [Skuchain]

Skuchain’s EC3 (Empowered Collaborative Commerce Cloud) is a blockchain-based platform that provides an end-to-end solution for supply chains and trade finance.

The platform has several core applications, including EDIBUS, ICF, and a Transaction Manager.

EDIBUS allows enterprises to share EDI documents, excel spreadsheets, CSV files and the like with their supply chain ecosystem members while maintaining field-level control over data privacy.

ICF (inventory control and finance) allows enterprises to use the distributed ledger payment commitment, a global standard for a payment commitment on a blockchain network, to obtain supply chain finance.

The transaction manager makes use of smart contracts that Skuchain calls brackets.

These brackets are used to digitise assorted traditional trade finance documents like letters of credit and make them accessible through the blockchain.   

EC3 customers are able to freely write their own business flows for a transaction and connect with bank back offices at relevant points in a transaction.

That kind of flexibility allows for expanded financing options like deep-tier financing or inventory financing.

They have also made use of an instrument called distributed ledger payment commitments (DLPC) as an alternative to the letter of credit.

Skuchain currently works with several large enterprises and their bank partners in the mining and minerals, electronics, automotive, and apparel industries.

These firms pay subscription and transaction fees to use EC3 and have led Skuchain to currently operate in the USA, Asia, South America, Europe, and Africa, but the platform is by no means restricted by geography.

One particular draw for EC3 is that, while it is based on Hyperledger Fabric, it is fully interoperable with networks built on Corda and is also able to port onto those built with Ethereum.

3|eTradeConnect [Hong Kong Trade Finance Platform Company Limited (HKTFPCL)]

eTradeConnect is a Hong Kong, China-based trade finance consortium operated by the Hong Kong Trade Finance Platform Company Limited.

The DLT-based platform currently offers products and processes to members including purchase order and invoice creation, pre-shipment trade finance, and post-shipment trade finance on open account trade, duplicated financing checks, and payment status updates.

In the near future, eTradeConnect plans to release cross-chain technology that will allow for connectivity amongst different DLT trade platforms.

Current participants in the platform include: Australia and New Zealand Banking Group Limited; Bank of China (Hong Kong) Limited; Bank of East Asia Limited, DBS (Hong Kong) Limited; Hang Seng Bank Limited; Hongkong and Shanghai Banking Corporation Limited; Standard Chartered Bank (Hong Kong) Limited; Agricultural Bank of China Ltd., Hong Kong, China Branch; BNP Paribas, Hong Kong, China Branch; Industrial and Commercial Bank of China (Asia); Shanghai Commercial Bank Limited; and Bank of Communications Co., Ltd., Hong Kong, China Branch.

Built using the Hyperledger Fabric framework, eTradeConnect’s permissioned network was built in partnership with Ping An Technology (Shenzhen) Co., Ltd and Shanghai OneConnect Financial Technology Co., Ltd. 

4|India Trade Connect [Infosys Finacle]

India Trade Connect is a DLT-based trade finance initiative that supports a comprehensive set of end-to-end trade and supply chain business functions including open account, letters of credit, bank guarantees, bill collections, C2C and B2B transactions, bill discounting, reverse factoring, and invoice financing. 

The permissioned platform, developed by technology agnostic Finacle Trade Connect and certified to work on all leading DLT vendors like R3 Corda, Hyperledger, and Ethereum, operates using a competitive fee model aligned to the volume of transactions.

Finacle Trade Connect is pre-integrated with partners like essDOCS and Traydstream to approve eTitle documents for the trade cycle and automate document checking and validation for trade finance and supply chain finance cycles.

It is also in the process of being integrated with VISA B2B Connect to provide B2B payments processing and settlement.  

Having launched operations in India, with the aim of achieving a global footprint, India Trade Connect comprises some of the leading banks in India, including ICICI Bank, Axis Bank, Standard Chartered Bank, YES Bank, Ratnakar Bank Limited, Bank of Baroda, Federal Bank, IDFC First Bank, Canara Bank, Kotak Mahindra Bank, Indusind Bank, South Indian Bank, and State Bank of India.

Finacle, the primary technology partner for India Trade Connect also has a solution for KYC called Finacle Identity Connect.

This is a blockchain-based solution that simplifies the KYC process requirements of banks.

It helps digitalize KYC processes, enable self-identity, validate national identity, and ensure a unified repository of information. 

5|komgo

komgo is a live, fully decentralized commodity trade finance network built on the Quorum blockchain infrastructure.

Investors and shareholders of the company include Citi, ING, Credit Agricole CIB, BNP Paribas, Societe Generale, ABN Amro, Macquarie, MUFG, Natixis, Rabobank, Gunvor, Mercuria, Koch, Shell, Total Trading, SGS, ConsenSys, and Jupiter Opportunity Fund.

More than 150 companies are currently using the platform. 

komgo offers three main families of products to its users:

1. Digital trade finance related products (including letters of credit, standby letters of credit, receivables discounting, and inventory financing), allowing commodity houses and other players to submit digital trade data and documents to financing institutions and apply for credit directly on the platform.
2. A KYC solution, standardizing and facilitating the process while maintaining privacy by transmitting data on a need-to-know basis: users and non-users benefit from a single source of trust to exchange documents on a secure and private network to perform KYC tasks.
3. A certification feature, that allows komgo users and non-users to stamp their documents on the network to ensure their authenticity.

In particular, the letter of credit and standby letter of credit product is very mature with over 20,000 letters of credit issued and a six-year track record.

These volumes are continuing to ramp up as large corporates and banks sign up. 

Komgo, which is built on the permissioned Quorum framework, has global operations with headquarters in Geneva and Singapore and plans to open a USA-based office in 2021.

They generate revenue through subscription fees and professional services charges for activities like integration. 

6|Marco Polo [TradeIX]

The Marco Polo Network, powered by R3’s Corda DLT platform, consists of over 30 banks comprising a global reach.

The fundamental aim of the network is to facilitate working capital finance solutions via a distributed trade finance platform.

Currently, this includes receivables finance and payment commitments, with and without financing, as well as payables finance – with the aim of including a payments product in the near future.

It also provides secure, distributed data storage and bookkeeping, identity management, and asset verification among other features.

APIs and legacy system compatibility allow banks to easily integrate their corporate clients with their ERP systems via the Marco Polo ERP app.

This helps to limit internal disruptions and eases communication with enterprise clients.

The first transactions on Marco Polo were conducted in March 2019.

These transactions, facilitated by the German banks Commerzbank and LBBW, were between the technology company Voith, the pump and valve manufacturer KSB, and the logistic company Logwin.

Since then, over 35 financial institutions and other participants such as Accenture, Microsoft, Mastercard, and Pole Star have joined the network.

Marco Polo operates following a license and transaction fee model and is gearing up to launch its supply chain finance products in the course of 2020.

7|Minehub

Minehub is designed to be the digital supply chain platform for the mining and metals industry.

The platform supports the end-to-end coordination of post-trade settlement processes for physical commodity transactions, including contracting, logistics, specifications, finance, and document management.

MineHub is built on HLF 2.2.

The initial focus is on enabling digital trade between the primary actors – sellers, buyers and lenders – but the roadmap for 2021 includes support for inspectors, insurers, and agents.

Minehub has been running 6 projects in raw materials, including iron ore, copper concentrate, and scrap metal, involving multinational corporations as well as SMEs on all continents.

Minehub’s worldwide operations will generate revenue through a two-tiered model.

A utility layer for operations teams will be accessible to all for a low-cost subscription fee, while premium services available for more value-based pricing.

8|People’s Bank of China Blockchain Trade Finance Platform / Bay Area Trade Finance Blockchain Platform

Originally unveiled as the Bay Area Trade Finance Blockchain Platform before broadening its geographic scope, the People’s Bank of China Blockchain Trade Finance Platform is a collection of four blockchain applications: account receivables financing, bill rediscount, tax filing, and international trade information collection.

The China-focused platform has garnered participation from 48 banks, including the Industrial and Commercial Bank of China, Bank of China, and China Construction Bank.

Besides major participating banks, Beijing Financial Assets Exchange has also joined the network. 

The platform’s underlying DLT technology has been independently developed by the Digital Currency Institute of the People’s Bank of China.

At present, they are working on a cross-platform project with Hong Kong Monetary Authority’s eTradeConnect.

eTradeConnect in turn has a relationship with the we.trade network, contributing to the development of a more global reach for the platform and its members. 

The permissioned platform’s non-profit business model allows them to focus on providing the most readily needed features and applications to many of the firms that most need them.

While it targets SMEs, the solution isn’t purely about trade finance.

It also covers supply chain accounts receivables, rediscounting by the central bank, automated tax filing, and supervision of international trades. 

9|TradeFinex

TradeFinex can be described as a hybrid blockchain and network of networks.

Underpinned by XinFin Network’s XDC protocol, TradeFinex connects multiple platforms by operating as a blockchain agnostic middleware.

They are already live with an agnostic integration for micro, small, and medium-sized enterprise (MSME) originators, connecting them with decentralised liquidity pools through the proprietary tokenization protocol for meeting MSME funding requirements. 

The globally reaching network operates as both permissioned and permissionless: permissionless for public verification but permissioned for selective data sharing.

This hybrid approach allows TradeFinex to provide its participating members with reporting features of accredited investors by their virtual assets net worth as well as the ability to tokenize offline obligations from originators.  

The current participants, Validus (Singapore MAS regulated), Enigio, Ramco (Singapore), ITFA, and WOA, pay network utility fees to gain access to the platform. 

In the future, TradeFinex plans to launch a liquidity aggregator service using on-chain tokens.

10|TradeWaltz [NTT Data]

TradeWaltz is a new platform built by NTT DATA that will enable all participants in the highly complicated international trade ecosystem to share information and deliver value to all users.

TradeWaltz’s ambition is to create an information platform that makes international trade secure by sharing electronic documents with guaranteed authenticity of each transaction and providing reliable information that people can easily and safely access whenever necessary.

As of March 2020, the participants in TradeWaltz included: MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation, Mizuho Bank, Ltd., Tokio Marine & Nichido Fire Insurance Co., Ltd., Sompo Japan Nipponkoa Insurance Inc., Mitsui Sumitomo Insurance Company, Limited, Sumitomo Corporation, Mitsubishi Corporation, Sojitz Corporation, Toyota Tsusho Corporation, Marubeni Corporation, ITOCHU Corporation, Kanematsu Corporation, Mitsui & Co., Ltd., Kawasaki Kisen Kaisha, Ltd., Nippon Express Co., Ltd., Nippon Yusen Kabushiki Kaisha, and Ocean Network Express Pte. Ltd.

11|UAE Trade Connect

Expected to launch in December 2020, UAE Trade Connect (UTC) is a permissioned DLT platform, developed by Avanza Innovations on the Hyperledger Fabric framework.

To date, the PoC and pilot tests have attracted eight banks that will participate in the production launch.

These banks are First Abu Dhabi Bank (FAB), Emirates NBD, Mashreq Bank, Commercial Bank International (CBI), National Bank of Fujairah (NBF), Abu Dhabi Islamic Bank (ADIB), Commercial Bank of Dubai (CBD), and Rak Bank.

UTC will be operated and governed by Etisalat, the UAE’s national telecommunications company, which will act as a neutral, state-owned entity to grow the platform by adding new banks and launching new use cases.

UAE Trade Connect addresses several of the issues with duplicate and fraudulent invoice financing that have posed considerable problems to banks in the industry.

The industry-wide solution aims to check for duplicate and fraudulent invoices submitted by banks using the blockchain network. 

UTC converts physical data into digital data, using optical character recognition (OCR) and DLT.

Many of the manual controls currently adopted by Banks will be able to be performed by the solution using machine learning technology.

A security-first design means that banks’ confidential information will remain protected throughout the solution as their data will not be shared with any other bank in the chain, allowing both banks and their clients to interact in a trusted marketplace.

It will generate revenue by charging banks for each transaction that they verify. 

12|we.trade

we.trade is a European-based trade finance consortium with plans to expand globally in 2021.

Through a license fee and transaction fee model, we.trade currently has a number of products that are live, including: Auto-Settlement: automation of payment based on pre-agreed conditions; Bank Payment Undertaking (BPU): confirmation of buyer’s bank to make a payment to the seller; BPU Financing: a financing option for the seller based on the BPU; and Invoice Financing: a financing option for the seller based on a single sales invoice. 

we.trade’s future product deployments will include enterprise resource planning (ERP) connectivity, open application interfaces (APIs) readiness (for 3rd party and back-office integration), additional payment triggers, and the addition of partial/multi payments, enhanced client directory, and insurance and logistics services.

Working with IBM to deploy the permissioned network on the Hyperledger Fabric framework, we.trade has attracted a number of shareholders and other member organizations.

These include: CaixaBank, Deutsche Bank, ERSTE Group, HSBC, KBC, Rabobank, Société Générale, UniCredit, Nordea, Santander, UBS and IBM as shareholders as well as UniCredit Germany, Eurobank (Greece), CSOB (Czech Republic), KB(Czech Republic), CSAS (Czech Republic), and CBC (Belgium) as member organizations. 

The post 12 companies using blockchain to rewire trade and trade finance appeared first on Trade Finance Global.

In the broader trade area there are several initiatives all working towards creating a set of standards. Some of these are focused on particular sectors or geographies while others are more general. Some are being spearheaded by large international organizations, others by private companies. The following table provides an at-a-glance look at some key initiatives in the space. This article takes a quick look at projects related to DLT and blockchain which are addressing standardisation in trade. 

Any discussion of standardization in a digitalized trade world would not be complete without mentioning the importance of regulatory work and of building a harmonized regulatory framework. A key actor in this respect is the United Nations Commission on International Trade Law (UNCITRAL). While this is not a standardization body, it plays a key role in working to build a harmonized international trade law framework to drive further progress.

Sector or Process Focused Initiatives

1|Blockchain In Transport Alliance (BiTA)

Founded in August 2017, BiTA counts nearly 500 members primarily from the freight, transportation, logistics and affiliated industries in over 25 countries. The BiTA is seeking to develop blockchain industry standards for the freight, transportation, logistics and affiliated industries; educate members and others on blockchain applications and solutions; and encourage the use and adoption of new solutions.

2|The Digital Container Shipping Association (DCSA)

DCSA is a nonprofit, independent organization established in 2019 by several of the largest container shipping companies. It seeks to promote interoperability in the container shipping industry by developing digital standards.

3|Mobility Open Blockchain Initiative (MOBI)

MOBI is a member-led consortium working to make transportation greener, more efficient, and more affordable using blockchain and related technologies. MOBI seeks to develop open standards for the automotive industry to support smart mobility blockchain adoption.

4|The Belt and Road Blockchain Consortium

The consortium is technically neutral. It develops buy-side business standards for electronic-ID disputed resolution processes and standardized interoperable smart contract standards that increase trust and transparency in cross-border trade.

5|The World Customs Organizations (WCO)

The WCO has developed a data model that is used by customs and other cross-border regulatory agencies to exchange information related to cross-border transactions.

General Trade Focused Initiatives

6|United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT)

UN/CEFACT is a subsidiary, intergovernmental body of the United Nations Economic Commission for Europe (UNECE) which serves as a focal point within the United Nations Economic and Social Council for trade facilitation recommendations and electronic business standards. It has developed a Core Component Library (UN/CCL) and is behind the UN/EDIFACT standard. It has also developed various supply chain standards such as the cross-industry invoice standard, and is now working on various blockchain projects.

7|The ICC Digital Standards Initiative (DSI)

Launched in September 2020, the ICC DSI which is supported by Enterprise Singapore and the Asian Development Bank, aims at developing digital standards to establish a globally harmonized, digitized trade environment.

General Private Sector Led Initiatives

8|The Enterprise Ethereum Alliance (EEA)

The EEA is a member-led industry organization whose objective is to drive the use of Ethereum blockchain technology as an open-standard to empower enterprises.

9|GS1

GS1 develops and maintains global supply chain standards (the most well-known of which is the barcode). GS1’s global standards for identification and structured data enable blockchain network users to scale enterprise adoption.

10|The Institute of Electrical and Electronics Engineers (IEEE)

IEEE is a technical professional organization that fosters technological innovation. In January 2018, it created a Blockchain Initiative (BLK) to coordinate projects and activities related to blockchain. The IEEE has been actively pursuing blockchain standardization efforts through various activities in multiple industry sectors.

11|The World Wide Web Consortium (W3C)

W3C is a technical standards body for the open internet that played a crucial role in standardizing the functionality of web browsers. Various business community groups focused on blockchain were created over the past few years, including a Blockchain Community Group whose mission is to generate message format standards of Blockchain-based on ISO20022 and guidelines for usage of storage. Another Group, the Blockchain Digital Assets Community Group, aims to discuss and eventually create and propose Web Specifications for creating and using Digital Assets on a Blockchain. Finally, the TNS Blockchain Group aims to explore the use of Digital Names within existing web applications. W3C is working on a decentralized identifier (DID) standard supported by the Decentralized ID Foundation.

International Standardization Bodies

12|International Telecommunications Union (ITU)

The ITU established a Focus Group on Application of Distributed Ledger Technology in May 2017 to identify and analyze DLT-based applications and services; draw up best practices and guidance which support the implementation of those applications and services on a global scale; and propose a way forward for related standardization work in ITU-T Study Groups. The Focus Group analyzed some 60 use cases and published a toolkit in 2019.

13|International Organization for Standardization (ISO)

ISO is a global network of national standards bodies. It established a technical committee on Blockchain and distributed ledger technologies (ISO TC/307) in 2016 to develop blockchain and DLT standards. As of September 2020, three standards had been developed and eight were in development. The Technical Committee counts 44 members and 13 observers.

National or Regional Initiatives

14|British Standards Institution (BSI)

The BSI is the national UK body developing standards. The BSI is working on blockchain standards for the supply chain. 

15|European Committee for Standardization (CEN) & European Committee for Electrotechnical Standardization (CENELEC)

The CEN and CENELEC are two European Standardization Organizations whose collaboration was consolidated at the start of 2010 by the creation of a common CEN-CENELEC Management Centre (CCMC) in Brussels. CEN and CENELEC recently established a new CEN-CENELEC Joint Technical Committee (JTC) ‘Blockchain and Distributed Ledger Technologies’ (JTC19), based on the recommendations presented in the CEN-CENELEC White Paper on ‘Recommendations for Successful Adoption in Europe of Emerging Technical Standards on Distributed Ledger/Blockchain Technologies’. CEN-CLC/JTC 19, whose Secretariat is held by UNI, the Italian Standardization Body, will be responsible for the development and adoption of standards for Blockchain and Distributed Ledger Technologies, covering organizational frameworks and methodologies, processes and products evaluation schemes, distributed ledger guidelines, smart technologies, objects, distributed computing devices and data services.  CEN-CLC/JTC 19 will identify international standards already available or under development and will work in close contact with ISO/TC 307 ‘Blockchain and distributed ledger technologies’. It also will focus on specific European legislative and policy requirements, in support of the development of the EU Digital Single Market.

16|China Electronic Standardization Institute (CESI)

Founded in July 1963, CESI is a nonprofit institution directly under the Ministry of Industry and Information Technology that is engaged in standardization, conformity assessment, and measurement activities in the field of electronic information technologies. CESI is working on national standards for blockchain to drive adoption of decentralized technology in public and private sectors across various industries. Since 2017, CESI has been conducting a Standard Blockchain System Function Test to certify the top blockchain projects operating in China.

17|European Telecommunications Standards Institute (ETSI)

ETSI is a European Standardization Organization. In December 2018, ETSI launched a new Industry Specification Group on Permissioned Distributed Ledger (ISG PDL) to analyze and provide the foundations to operate permissioned distributed ledgers to be deployed across various industries and governmental institutions.

18|European Blockchain Partnership (EBP) / European Blockchain Services Infrastructure (EBSI)

In April 2018, 21 EU Member States and Norway agreed to sign a declaration creating the European Blockchain Partnership and to cooperate in the establishment of a European Blockchain Services Infrastructure that will support the delivery of cross-border digital public services using blockchain technology. The EBSI will be materialized as a network of distributed nodes across Europe (the blockchain), leveraging an increasing number of applications focused on specific use cases. 

19|National Institute of Standards and Technology (NIST)

NIST was founded in 1901 and is now part of the U.S. Department of Commerce. NIST published “A Taxonomic Approach to Understanding Emerging Blockchain Identity Management Systems” and it recently issued draft NISTIR 8301, Blockchain Networks: Token Design and Management Overview, which provides a high-level technical overview and conceptual framework of token designs and management methods. 

The post REVEALED: The 19 Standardization Projects related to blockchain aiming to glue trade together appeared first on Trade Finance Global.

In this analysis of the TFG and WTO survey results, industry leaders provide their views on what the future of the DLT in trade industry will look like.

With opportunities in mind and challenges addressed, we are free to look ahead to what the experts believe the future of the industry has in store. According to our survey the trade industry will see a gradual evolution, not a revolution leading to a web of connected ecosystems and consortia models that drive collective value.  

Evolution not a revolution

In discussing how the DLT in trade landscape would alter in the years to come, many experts point to the idea that change will come rather slowly at first. “The change curve is expected to have an exponential shape, so a slow start, a turning point and a steep end” (Hans J. Huber, ICC DSI). This is due to the fact that, in the trade space, many of the changes that need to be made “will take time and effects are often interrelated in a limitational manner” (Hans J. Huber, ICC DSI). Changes as wide reaching as eliminating siloed systems, displacing paper-based administration, digitizing consumer and service provider processes, addressing legal and jurisdictional concerns are limited to the progress made in each of the others. At some time in the future, a tipping point will be reached in the development of each, reducing the restrictional interrelatedness and allowing much more rapid progression to occur. While it is difficult to determine precisely how sharo the uprise will be, or when it will occur, the ICC DSI expects “the turning point to occur in the next 4-7 years, if concerted efforts are being started now.” 

The future-looking results collected in our industry survey indicate a similar sentiment. When asked about their outlook for the widespread adoption of DLT within the trade finance space, only 42 percent indicated a positive outlook in five years time but that number jumps to 73 percent when the time horizon is expanded to ten years. Both the quantitative and qualitative results support the notion of a gradual DLT evolution. 

“It will be an evolution, not a revolution”

Jacco de Jong, Global Head of Sales, Bolero International

A web of connected ecosystems 

While several experts pointed to a future web of connected ecosystems, the vision of their exact composition varied. It seems likely that “Consortia and ecosystems will cohabit as isolated solutions to specific markets or industries” (Pierre Sien, Euler Hermes). Some form of interconnectedness between these cohabitating networks is a near standard claim, although the manner of interconnectedness varies. Relating to this realm, some experts believe that the industry “is likely to be technology-agnostic and that ecosystems and standards will evolve to be able to send and receive information to any platform across a shared set of protocols” (Daniel Wilson, Maersk GTD). Other views contain less technical interoperability optimism. Pierre Sien from Euler Hermes says that “new challenges will be in interconnecting those ecosystems. Trusted third parties will still exist and they will become central to ecosystems that look forward to opening to other ecosystems”. Whether technical interoperability challenges can be overcome, or trusted oracles will become a necessity for facilitating interconnectedness, it seems likely that in the future the DLT in trade space will consist of an ecosystem of interconnected networks.  

“Trade Finance will hopefully be a web of connected, aligned, and value-creating ecosystems that allow existing customers of financing to receive better products at more competitive pricing” 

-Daniel Wilson,Head of Strategy and Operations, Maersk GTD.

Value-Creating Governance Models

An aspect of the DLT environment that is often overlooked in the mainstream media, is the business models of the consortia that are forming, and how care must be taken when designing these to create value for all parties involved. Bringing a multitude of firms together into a consortium has the potential to create many positive benefits for the industry as a whole and for the individual participant firms well in excess of the consortia setup and maintenance costs. In order to ensure the continued strength of the consortia that currently exist, and to promote the creation of new, innovative consortia, certain considerations must be made. Most notably, these consortia must establish ways of ensuring that the collective benefits that are generated by this model are allocated in a fair and equitable way. According to cooperative game theory, developing and implementing a gains allocation model will provide participating organizations with financial clarity while simultaneously reducing the fear that other firms may be benefitting parasitically off their dedicated investments. This transparency will help to enhance the trust and stability that will encourage individual firm’s willingness to disclose sensitive information to other consortium members. This mutual divulgence of information will strengthen a consortium from the inside out, and drive an increase in commitment. Not operating in this cooperatively beneficial manner would leave a consortium weak, resentful, and vulnerable to secretive self-destruction.

Industry Outlook

An examination of the data collected by the TFG, ICC, and WTO survey on DLT in trade revealed some insights into the perceptions held about the future of the industry. First, there seems to be a collectively positive perception of the state of the industry at the 5-, 10-, 30-, and 50-year outlooks. The 10-year industry outlook holds the most positive sentiment with a modest decline then happening through the 30 and 50-year views. This seems to indicate that the state of the technology and its widespread adoption will grow over the next 10 years. Beyond this time frame, it seems as though the perception is that DLT’s prevalence in the industry will gradually decrease. Perhaps this will be in light of the development of newer technology that could render DLT obsolete. While these predictions do offer some insight, it is important to recognize the immense difficulty that exists in predicting what the next 50 years will hold. 

It is also interesting to note the difference in perceptions of the technology over time between firms using or developing DLT and firms not using of developing DLT. At each of the four-time spans, firms not currently using or developing DLT have a statistically significantly lower perception of its widespread adoption in the future. There could be several varyinge\explanations for this. One possible explanation is that firms possessing a preconceived pessimistic outlook for the technology were less likely to have begun developing or using the technology. This would have created a naturally positive bias when segmenting out those firms that are using or developing. Another explanation could be that firms using or developing technology have a greater insight into the industry than those who are not actively involved. This would allow them to be more aware of the acute happenings in the field, such as when progress has been made to overcome a once insurmountable challenge. Insider knowledge of this sort could also be used to explain the statistical differences noted above. 

Another insight can be gained when looking at the perceptions of challenges facing DLT between these firms types. Firms using or developing DLT perceive regulatory, compliance, and legal challenges, as well as technology challenges as having a significantly smaller magnitude. Similarly, amongst firms using or developing DLT, there is a slight negative correlation between the current state of development for that firm, and their perception of both regulatory and technology challenges. This means that the further along in the implementation stage a firm is, the less prominent they view the challenges of the industry. This could be because firms actively involved in the space are constantly aware of when an advancement has been made to overcome a past challenge and are thus better attuned to the exact current state of the industry. However, these same data, as they merely represent a gauge of perception, could be construed to mean that firms using or developing DLT are inherently subjected to a natural bias that is causing them to view these challenges through magnitude-mitigating rose-coloured glasses.       

The post DLT in Trade: A future-looking perspective appeared first on Trade Finance Global.

ICC DSI

“We did not choose DLT. The world chose it and now the need for standardization has become apparent” 

Hans J. Huber and David Bischof, Project Managers, ICC DSI

As part of its mandate in setting rules and standards the International Chamber of Commerce (ICC) is now developing a Digital Trade Standards Initiative (DSI) to develop cross-industry digital trade standards that will build on existing work that has been done in the industry by the Universal Trade Network (UTN) as well as other initiatives and organisations.

DSI will be leading efforts to digitise trade, notably by the creation of open trade and technology standards to drive technical interoperability among the numerous blockchain-based networks and technology platforms that have entered the trade and trade finance space over the past two years.

Work is set to commence at the beginning of 2020 and will gradually cover all areas of trade and trade assets. The fundamental aim is to deflate the number of data formats that exist and simplify data exchange between different blockchain systems. The initiative’s ambition is also to design frameworks and standards for cross-ledger attestation and transaction finality as well as standards around digital identities and globally unified rules for the use of smart contracts in trade.

The aim is to promote standards already in use and reconcile potentially competing standards. The DSI supports the creation of standards for all systems, blockchain or otherwise and aim to form a horizontal layer beneath all trade systems and form a network of networks. The ICC DSI initiative will be open for all organisations supporting the core mandate.    

TradeFinex

“A network of networks does not see competition only interoperability” 

– Atul Khekade, Co-Founder and Ecosystem Development, TradeFinex Tech Ltd.

TradeFinex aims to be a network of networks by connecting several DLT and non-DLT trade finance initiatives, such as Voltron and SWIFT MT 798. Created in 2017, TradeFinex consists of a company with an underlying network backed by a community of 11,000 members and over 30 MSMEs. The Governing members can opt for a masternode of XinFin Network, the underlying blockchain network, or opt for a Hybrid Council node. Hybrid nodes can combine R3 Corda Enterprise, Hyperledger Besu Enterprise, or Oracle Enterprise Node with the XinFin Masternode.

The project is currently live with receivables discounting and has plans to introduce Letters of Credit by 2020. As a future phase, TradeFinex intends to interoperate with Bolero for accessing Digitized Bills of Lading. TradeFinex also being integrated with Tradeshift marketplace. To accomplish these goals DLT was chosen for its instant access and ownership over data, tokenization of assets, real-time settlements, counterparty risk mitigation, and decentralization. 

In 2018, the TradeFinex platform was used by Ramco Air France KLM Labs for a PoC of supply chain finance for Airline suppliers. In 2019, a USD 10 million undisclosed-buyer-led supply-chain management program for engine parts was launched.

The post DLT Network of Networks projects in Trade appeared first on Trade Finance Global.

TFG spoke to Emmanuelle Ganne, Senior Analyst and Blockchain Lead at the World Trade Organization on the state of digitisation within trade and trade finance. With the rise of numerous DLT and non-DLT consortia, what role should multilateral bodies play, and how can we create paperless trade together? The interview was held at ExCred Commodities in London.

Featuring: Emmanuelle Ganne, Senior Analyst, WTO Blockchain Lead, World Trade Organization

Host: Deepesh Patel, Editor, Trade Finance Global

Blockchain and DLT for Trade and Trade Finance – The Role of Multilaterals in the Digitisation of Trade

DP: What are the broad trends in commodity financing?

EG: So my name is Emmanuelle Ganne and I work at the World Trade Organisation in the Economic Research Department. I spend a lot of time working on SMEs and digital technologies, in particular, blockchain.

DP: Is the digitalisation of trade actually helping smaller commodity producers and traders?

The key word in your question is actually, SMEs struggle to access trade finance, which is a critical component of trade – 80% of international trade is financed by some form of trade financing. So it’s critical for companies to be able to secure trade finance. The recent Asian Development Bank trade finance gap showed that the trade finance gap remains at around $1.5 USD trillion. And about 46% of SMEs still have their trade finance requests being declined. There is also growing optimism that digitalization and technologies such as AI and blockchain can facilitate access to trade finance.

DP: What technological and DLT initiatives are you seeing within trade, shipping and insurance?

EG: There a lot of initiatives in trade finance, with many consortia having emerged over the past few years, and some startups as well. Some of them are very promising, and really offer solutions to SMEs. We.trade, for example, is an interesting consortium that is already in production, so it’s not in the proof of concept phase like many others, but they actually have real products and live transactions. There are also a number of other initiatives in transportation, such as IBM Maersk’s Tradelens platform.

The role of multilaterals in blockchain for trade

DP: Should consortia and networks be driven by multilateral bodies such as the WTO or the ICC?

I think there’s a critical role for international organisations like the WTO or the ICC, to bring the different stakeholders together and to coordinate action on this front; what we see right now is a Digital Island problem. We have all these platforms that have emerged, that’s great, except that they don’t really talk to each other. They don’t really talk to each other at a technical level. And what we need to do now is to address these collaborative efforts at a global level to try and work on some standards. 

DP: Tell us a bit more about your Blockchain for Trade workshop that you’re hosting at the WTO in December!

Yes indeed, we will be having a Global Trade and Blockchain Forum at the WTO on the 2nd and 3rd of December. The idea is to bring together the different stakeholders, private sector representatives, and also governments present. We want to bring together the representatives of other international organisations to discuss global trade and blockchain, because when it comes to global trade, it’s very important to look at all the different applications and all of the different components of global trade, trade finance, and also transportation, logistics, and border procedures all together, so that we can try and remove frictions and build synergies.

This podcast was in partnership with the Excred Commodity conference series.

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